Positive Momentum Faces a Test Ahead of Key U.S. Inflation Data

Markets are showing signs of stabilisation, but positive momentum is still searching for firm support. Investors remain cautious as a dense macro calendar keeps inflation risks and monetary policy firmly in focus.

Inflation expectations take centre stage

The key macro release of the day is the New York Fed’s survey of household inflation expectations for January. A reading meaningfully above or below December’s 3.42% level could prompt a swift reassessment of inflation persistence and policy expectations.

Markets remain sensitive to even modest shifts in inflation expectations, particularly as investors attempt to gauge how restrictive policy may need to remain in the coming months.

Fed signals and digital assets in focus

Later today, Federal Reserve Governor Christopher Waller is scheduled to speak on the topic of digital assets and the U.S. dollar. The cryptocurrency market remains highly responsive to regulatory and policy signals, and short-term volatility in the sector cannot be ruled out.

Bitcoin has rebounded toward the $70,000 level after briefly dipping to $60,000, though elevated volatility remains a key risk.

Precious metals consolidate after turbulence

Gold is consolidating near the $5,000 per ounce level following recent turbulence, which U.S. Treasury Secretary Scott Bessent linked to speculative activity in Chinese markets. Silver has recovered to around $80 per ounce, supported by active dip-buying from retail investors.

From a technical perspective, gold is forming a local upward channel and is approaching a potential test of the $5,100 level.

Earnings season supports sentiment

As of February 9, approximately 58% of S&P 500 companies have reported quarterly results. According to FactSet, aggregate earnings growth expectations have been revised higher, rising from 8.1% to 14%.

The improvement in earnings momentum has helped offset macro uncertainty, providing support to equity indices near recent highs.

Equity indices: consolidation near key levels

U.S. equities closed the previous session higher, with the S&P 500 reclaiming the 6,900 level and moving closer to its all-time high. The Nasdaq rebounded from the 24,500 area but remains capped below a local downward trend line.

Today, S&P 500 and Nasdaq futures are trading in a consolidation pattern. Maintaining support above 6,900 for the S&P 500 and 25,000 for the Nasdaq remains critical for preserving the current rebound and opening the door to further upside.

Sectors and cross-asset signals

Cyclical sectors led gains, with industrials, materials and retail-related ETFs outperforming. Growth-oriented sectors also posted mostly positive performance, while healthcare led advances among defensive sectors, continuing its medium-term upward trend.

Across asset classes, oil is hovering near the lower boundary of a local upward channel around $63. Treasury yields remain within a medium-term rising channel after rebounding from the 4.2% level. The VIX is holding near 18 after easing from a key resistance line.

Overall, the balance of risks remains neutral amid moderate volatility. Markets are likely to remain range-bound as investors await upcoming U.S. CPI data and labor market indicators, which will play a decisive role in shaping near-term expectations.

Technical analysis by: Lucas Grant, Senior Technical Analyst at Finmire.